In this episode housing blogger Patrick Killelea explains why real-estate prices still have a long ways to fall in the tonier communities. Prices fell faster in poor areas where people live paycheque to paycheque. The more well heeled home-owner has assets to burn through, and it takes them longer to get desperate enough to take losses. Patrick also talks about how the primary problem is the masses of bad debt, out of relation to incomes, which still hasn’t been written down throughout the economy. In Patrick’s view, the cozy relationships between banks and government have made the financial crisis what it is. The only thing government efforts to subsidize housing (or anything else, like education) accomplish is to drive up prices. You can check out Patrick’s economic news site here (as well as his great forums for discussing real-estate and the economy): http://patrick.net If you are interested in deflation, check out the Deflation Study Group on LinkedIn (open to all LinkedIn members): http://linkd.in/deflationsg You can also listen to my in-depth Deflation 101 podcast. http://bit.ly/deflation101
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